TABLE OF CONTENTS

 

ARTICLE I  DEFINITIONS		1
1.1	Definitions	1
1.2	Classification of Loans and Advances	21
1.3	Terms Generally	21
ARTICLE II  THE CREDITS		21
2.1	Commitment	21
2.2	Required Payments; Termination	21
2.3	Ratable Revolving Loans	21
2.4	Types of Advances	22
2.5	Commitment Fee; Reductions and Increases in Aggregate Commitment	22
2.6	Minimum Amount of Each Advance	24
2.7	Optional Principal Payments	24
2.8	Method of Selecting Types and Interest Periods for New Advances	25
2.9	Conversion and Continuation of Outstanding Advances	25
2.10	Changes in Interest Rate, etc.	26
2.11	Rates Applicable After Default	26
2.12	Method of Payment	26
2.13	Noteless Agreement; Evidence of Indebtedness	27
2.14	Telephonic and Facsimile Notices	28
2.15	Interest Payment Dates; Interest and Fee Basis	28
2.16	Notification of Advances, Interest Rates, Prepayments and Commitment Reductions	28
2.17	Lending Installations	28
2.18	Non-Receipt of Funds by the Agent	29
2.19	Facility LCs	29
2.20	Extension of Facility Termination Date	34
2.21	Replacement of Lender	36
2.22	Swing Line	37
ARTICLE III  YIELD PROTECTION; TAXES		38
3.1	Yield Protection	38
3.2	Changes in Capital Adequacy Regulations	38
3.3	Availability of Types of Advances	39
3.4	Funding Indemnification	39
3.5	Taxes	39
3.6	Lender Statements; Survival of Indemnity	41
ARTICLE IV  CONDITIONS PRECEDENT		41
4.1	Initial Credit Extension	41
4.2	Each Credit Extension	42

 

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ARTICLE V  REPRESENTATIONS AND WARRANTIES			43
5.1	Incorporation, Qualification, Powers and Capital Stock		43
5.2	Execution, Delivery and Performance of Loan Documents		43
5.3	Compliance with Laws and Other Requirements		44
5.4	Subsidiaries		44
5.5	Financial Statements of the Borrower and its Consolidated Subsidiaries		45
5.6	No Material Adverse Change		45
5.7	Tax Liability		46
5.8	Litigation		46
5.9	ERISA		46
5.10	Regulations U and X		47
5.11	No Default or Unmatured Default		47
5.12	Ownership of Property; Liens		47
5.13	Environmental Matters		47
5.14	Investment Company Act		48
5.15	Public Utility Holding Company Act		48
5.16	Subordinated Indebtedness		48
5.17	Accuracy of Information
ARTICLE VI  COVENANTS			49
6.1	Financial Statements		49
6.2	Certificates; Other Information		49
6.3	Payment of Obligations		51
6.4	Conduct of Business and Maintenance of Existence		51
6.5	Maintenance of Property; Insurance		51
6.6	Inspection of Property; Books and Records; Discussions		52
6.7	Notices		52
6.8	Environmental Laws		53
6.9	Guaranties from Future Subsidiaries; Release of Guarantors		53
6.10	Use of Proceeds		54
6.11	Taxes		54
6.12	Limitation on Liens		54
6.13	Limitation on Guarantee Obligations		55
6.14	Limitations on Fundamental Changes		56
6.15	Limitations on Sales of Assets		56
6.16	Limitation on Dividends		57
6.17	Limitation on Investments		57
6.18	Limitation on Optional Payments and Modification of Debt Instruments		58
6.19	Transactions with Affiliates		59
6.20	Fiscal Year		59
6.21	Compliance with ERISA		59
6.22	Preferred Stock		60
6.23	No Other Negative Pledges		60
6.24	Consolidated Tangible Net Worth		60
6.25	Leverage Ratio		60

 

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6.26	Minimum Interest Coverage	60
6.27	Senior Permitted Debt Not to Exceed Borrowing Base	60
6.28	Limitation on Housing Inventory	60
6.29	Limitations on Land Inventory	61
ARTICLE VII  DEFAULTS		61
ARTICLE VIII  ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES		63
8.1	Acceleration; Facility LC Collateral Account	63
8.2	Amendments	64
8.3	Preservation of Rights	65
ARTICLE IX  GENERAL PROVISIONS		65
9.1	Survival of Representations	65
9.2	Governmental Regulation	65
9.3	Headings	65
9.4	Entire Agreement	65
9.5	Several Obligations; Benefits of this Agreement	66
9.6	Expenses; Indemnification	66
9.7	Numbers of Documents	66
9.8	Accounting	67
9.9	Severability of Provisions	67
9.10	Nonliability of Lenders	67
9.11	Confidentiality	67
9.12	Nonreliance	68
9.13	Disclosure	68
9.14	USA PATRIOT Act	68
ARTICLE X  THE AGENT		68
10.1	Appointment; Nature of Relationship	68
10.2	Powers	69
10.3	General Immunity	69
10.4	No Responsibility for Loans, Recitals, etc.	69
10.5	Action on Instructions of Lenders	69
10.6	Employment of Agents and Counsel	69
10.7	Reliance on Documents; Counsel	70
10.8	Agent’s Reimbursement and Indemnification	70
10.9	Notice of Default	70
10.10	Rights as a Lender	71
10.11	Lender Credit Decision	71
10.12	Successor Agent	71
10.13	Agent and Arranger Fees	72
10.14	Delegation to Affiliates	72

 

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10.15	Co-Agent, Documentation Agent, Managing Agent, Syndication Agent, etc.	72
ARTICLE XI  SETOFF; RATABLE PAYMENTS		72
11.1	Setoff	72
11.2	Ratable Payments	72
ARTICLE XII  BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS		73
12.1	Successors and Assigns	73
12.2	Participations	75
12.3	Pledge to Federal Reserve Bank	75
12.4	Dissemination of Information	76
ARTICLE XIII  NOTICES		76
13.1	Notices; Effectiveness; Electronic Communication	76
ARTICLE XIV  COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION		77
14.1	Counterparts; Effectiveness	77
14.2	Electronic Execution of Assignments	77
ARTICLE XV  CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL		77
15.1	CHOICE OF LAW	77
15.2	CONSENT TO JURISDICTION	78
15.3	WAIVER OF JURY TRIAL	78

 

PRICING SCHEDULE

EXHIBIT A – BORROWING BASE CERTIFICATE

EXHIBIT B – GUARANTY

EXHIBIT C – COMMITMENT AND ACCEPTANCE

EXHIBIT D – NOTE

EXHIBIT E – ASSIGNMENT AND ASSUMPTION AGREEMENT

EXHIBIT F – SWING LINE NOTE

EXHIBIT G-1 – OPINIONS OF TIMOTHY J. GECKLE, GENERAL COUNSEL

EXHIBIT G-2 – OPINION OF DLA PIPER RUDNICK GRAY CARY LLP

EXHIBIT H – COMPLIANCE CERTIFICATE

SCHEDULE 1 – LENDERS AND COMMITMENTS

SCHEDULE 2 – EXISTING LCs

SCHEDULE 3 – GUARANTORS

SCHEDULE 5.4 – SUBSIDIARIES

 

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SCHEDULE 6.9 – SUBSIDIARIES THAT ARE NOT REQUIRED TO BE GUARANTORS

 

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CREDIT AGREEMENT

 

This Agreement, dated as of January 12, 2006, is among The Ryland Group, Inc., a Maryland corporation, the Lenders and JPMorgan Chase Bank, N.A., as Agent.  The parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1           Definitions .  As used in this Agreement:

 

“ABR”, when used in reference to any Loan or Advance, refers to whether such Loan, or the Loans comprising such Advance, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

“Acquisition” means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company.

 

“Additional Lender” is defined in Section 2.5.3(i).

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Agent.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Advance for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

 

“Advance” means a borrowing hereunder consisting of Loans (i) made by the Lenders on the same Borrowing Date, or (ii) converted or continued by the Lenders on the same date of conversion or continuation, consisting, in either case, of the aggregate amount of the several Loans of the same Type and, in the case of Eurodollar Loans, for the same Interest Period.

 

“Affected Lender” is defined in Section 2.21(a).

 

“Affiliate” of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person.  A Person shall be deemed to control another Person if the controlling Person owns 25% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power

 

 

to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.

 

“Agent” means JPMorgan Chase Bank, N.A., in its capacity as agent for the Lenders hereunder and any successor agent appointed pursuant to Section 10.12.

 

“Aggregate Commitment” means the aggregate of the Commitments of all the Lenders, as reduced or increased from time to time pursuant to the terms hereof.  As of the date of this Agreement, the Aggregate Commitment is $750,000,000.

 

“Aggregate Credit Exposure” means, at any time, the sum of the Revolving Credit Exposure of all the Lenders.

 

“Agreement” means this credit agreement, as it may be amended or modified and in effect from time to time.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus ½ of 1%.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.

 

“Applicable Fee Rate” means, at any time, the percentage rate per annum at which the Commitment Fee is accruing on the unused portion of the Aggregate Commitment at such time as set forth in the Pricing Schedule.

 

“Applicable Margin” means, with respect to Eurodollar Advances at any time, the percentage rate per annum which is applicable at such time with respect to Eurodollar Advances as set forth in the Pricing Schedule.

 

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or Affiliate of an entity that administers or manages a Lender.

 

“Arranger” means J.P. Morgan Securities Inc., a Delaware corporation, and its successors, in its capacity as Lead Arranger and Sole Book Runner.

 

“Article” means an article of this Agreement unless another document is specifically referenced.

 

“Assessment Rate” means, for any day, the annual assessment rate in effect on such day that is payable by a member of the Bank Insurance Fund classified as “well-capitalized” and within supervisory subgroup “B” (or a comparable successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any successor provision) to the Federal Deposit Insurance Corporation for insurance by such corporation of time deposits made in dollars at the offices of such member in the United States; provided that if, as a result of any change in any law, rule or

 

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regulation, it is no longer possible to determine the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall be determined by the Agent to be representative of the cost of such insurance to the Lenders.

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 12.1(b)), and accepted by the Agent, in the form of Exhibit E or any other form approved by the Agent.

 

“Authorized Person” means any Responsible Official of the Borrower or any Person designated, by written notice from any such Responsible Official to the Agent from time to time, as an “Authorized Person,” provided , however , that, for purposes of each Borrowing Base Certificate and the certificates provided for in Sections 6.1(b), 6.2(b), 6.2(c) and 6.17(c), such Authorized Person must be an officer of the Borrower.

 

“Available Aggregate Commitment” means, at any time, the Aggregate Commitment then in effect minus the Aggregate Credit Exposure at such time.

 

“Base CD Rate” means the sum of (a) the Three-Month Secondary CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.

 

“Borrower” means The Ryland Group, Inc., a Maryland corporation, and its successors and assigns.

 

“Borrowing Base” means, except as set forth below, an amount equal to the sum of the following Unencumbered Real Estate Inventory owned by the Borrower or any Guarantor and Home Proceeds Receivable owned by the Borrower or any Guarantor:

 

(a)                                   90% of the amount of Home Proceeds Receivable; plus

 

(b)                                  90% of the book value of Sold Construction in Progress and Sold Completed Units; plus

 

(c)                                   80% of the book value of Unsold Construction in Progress and Unsold Completed Units; plus

 

(d)                                  70% of the book value of Finished Lots; plus

 

(e)                                   50% of the book value of the Land Under Development; plus

 

(f)                                     25% of the book value of the Raw Land — Entitled;

 

provided , however , that the amount set forth in clause (f) shall not exceed 10% of the Borrowing Base; and provided further that the sum of the amounts set forth in clauses (d), (e) and (f) shall not exceed 40% of the Borrowing Base.

 

“Borrowing Base Certificate” means a written calculation of the Borrowing Base, substantially in the form of Exhibit A attached hereto and made a part hereof, signed by an

 

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Authorized Person and properly completed to provide all information required to be included thereon.

 

“Borrowing Date” means a date on which an Advance or Swing Line Loan is made hereunder.

 

“Borrowing Notice” is defined in Section 2.8.

 

“Business” is defined in Section 5.13(b).

 

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in Houston, Texas, Los Angeles, California or New York, New York are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Advance or Eurodollar Loan, the term “ Business Day ” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

 

“Capitalized Lease” of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP.

 

“Capitalized Lease Obligations” of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP.

 

“Cash Equivalents” means: (a) securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality thereof having maturities of not more than 90 days from the date of acquisition; (b) time deposits and certificates of deposit of any of the Lenders, or of any domestic or foreign commercial banks which has capital and surplus in excess of $500,000,000 or which has a commercial paper rating meeting the requirements specified in clause (d) below, having maturities of not more than 90 days from the date of acquisition; (c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (a) and (b) above entered into with any bank meeting the qualifications specified in clause (b) above; and (d) commercial paper of any Person rated at least A-2 or the equivalent thereof by S&P or P-2 or the equivalent thereof by Moody’s and in either case maturing within 90 days after the date of acquisition.

 

“Change in Control” means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of the Borrower.

 

“Change in Law” means (a) the adoption of any Requirement of Law after the date of this Agreement, (b) any change in any Requirement of Law, or in the interpretation, administration or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or LC Issuer (or, for purposes of Section 3.1 and 3.2, by any Lending Installation of such Lender or by such Lender’s or LC Issuer’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

 

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“Class”, when used in reference to any Loan or Advance, refers to whether such Loan, or the Loans comprising such Advance, are Revolving Loans or Swing Line Loans.

 

“Closing Date” means the date on which the conditions set forth in Section 4.1 are satisfied.

 

“Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

 

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Facility LCs and Swing Line Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s potential Revolving Credit Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant to the terms hereof.  The initial amount of each Lender’s Commitment is set forth on Schedule 1 .

 

“Commitment and Acceptance” is defined in Section 2.5.3(i).

 

“Commitment Fee” is defined in Section 2.5.1.

 

“Commonly Controlled Entity” means an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414 of the Code.

 

“Completed Unit” means a Unit as to which either (or both) of the following has occurred: (a) a notice of completion has been filed or recorded in the appropriate real estate records, or (b) all necessary construction has been completed in order to obtain a certificate of occupancy (whether or not such certificate of occupancy has actually been obtained).

 

“Consolidated Indebtedness” means at any time the Indebtedness of the Borrower and the Guarantors (specifically excluding the Indebtedness of any Subsidiaries that are not Guarantors but including the pro rata share of the Indebtedness of Joint Ventures to the extent provided for in the definition of “Indebtedness”).

 

“Consolidated Intangible Assets” means, with respect to any Person at any date, all amounts, determined in accordance with GAAP, included in the Consolidated Net Worth of such Person and attributable to intangibles including (a)  goodwill, including any amounts (however designated on the balance sheet) representing the cost of acquisitions of Subsidiaries in excess of underlying tangible assets or (b) patents, trademarks and copyrights.

 

“Consolidated Interest Incurred” means for any period, for the Borrower and the Guarantors (specifically excluding any Subsidiaries that are not Guarantors) on a consolidated basis, interest expense plus interest capitalized into inventory in such period.

 

“Consolidated Net Income” means, for any period, the consolidated net income (or loss) of the Borrower and the Guarantors (specifically excluding any Subsidiaries, joint ventures and partnerships that are not Guarantors) for such period (taken as a cumulative whole).

 

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“Consolidated Net Worth” means, with respect to a Person, all amounts which would, in accordance with GAAP, be included under shareholders’ equity on a consolidated balance sheet for such Person and its consolidated Subsidiaries.

 

“Consolidated Tangible Net Worth” means (a) Consolidated Net Worth of the Borrower and the Guarantors (specifically excluding any Subsidiaries that are not Guarantors but specifically including the investment of the Borrower or any Guarantor in any Joint Venture) less (b) all Consolidated Intangible Assets included in such Consolidated Net Worth.

 

“Construction in Progress” means Finished Lots (a) for which a final subdivision map has been recorded and (b) upon which construction has commenced, as evidenced by the commencement of excavation for foundations, but has not been completed.

 

“Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership.

 

“Contractual Obligation” means, with respect to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound.

 

“Controlled Group” means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code.

 

“Conversion/Continuation Notice” is defined in Section 2.9.

 

“Countrywide” means Countrywide Home Loans, Inc.

 

“Countrywide Loan Purchase Agreement” means the Loan Purchase Agreement by and between Ryland Mortgage Company and Countrywide dated as of June 26, 1995, as supplemented, modified, amended, restated or extended from time to time.

 

“Credit Advance” means any advance, loan or extension of credit to any Person or the purchase of any bonds, notes, debentures or other debt securities of any Person.

 

“Credit Extension” means the making of an Advance or Swing Line Loan or the issuance or Modification (other than a Modification that does not increase the amount or extend the expiry date)  of a Facility LC hereunder, but not the conversion or continuation of an Advance.

 

“Credit Extension Date” means the Borrowing Date for an Advance or the issuance date for a Facility LC.

 

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“Default” means an event described in Article VII.

 

“EBITDA” means, for any period, (i) the sum of the following amounts:  (a) Consolidated Net Income for such period; (b) cash distributions received by Borrower from the Financial Services Segment not otherwise included in the determination of such Consolidated Net Income; (c) income and franchise taxes deducted from revenues in determining such Consolidated Net Income; (d) depreciation and amortization deducted from revenues in determining such Consolidated Net Income; (e) interest expense deducted from revenues in determining such Consolidated Net Income (including, without duplication, previously capitalized interest expense which would be included in “Cost of Goods Sold” and deducted from revenues in determining such Consolidated Net Income on a combined income statement of the Borrower and the Guarantors); (f) other non-cash charges and expenses (including net realizable value write-down charges) deducted from revenues in determining such Consolidated Net Income; and (g) any losses arising outside of the ordinary course of business which have been included in the determination of such Consolidated Net Income; less (ii) the sum of (x) any non-cash credits included in revenues in determining such Consolidated Net Income and (y) any gains arising outside of the ordinary course of business included in the determination of such Consolidated Net Income.

 

“Entitled Land” means (a) land where all requisite zoning requirements and land use requirements have been satisfied, and all requisite approvals have been obtained (on a final and unconditional basis) from all applicable governmental authorities (other than approvals which are simply ministerial and non-discretionary in nature), in order to develop the land as a residential housing project and construct Units thereon; and (b) as to land located in California, land which satisfies the requirements of clause (a) immediately above, and which is subject to a currently effective vesting, tentative map (unless a county or city where the land is located does not grant vesting tentative maps) which has received all necessary approvals (on a final and unconditional basis) by all applicable Governmental Authorities.

 

“Environmental Laws” means any and all foreign, federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) as now or may at any time hereafter be in effect regulating, relating to or imposing liability or standards to conduct concerning (i) pollution or protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof.

 

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) a violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Materials of Environmental Concern, (c) exposure to any Materials of Environmental Concern, (d) the release or threatened release of any Materials of Environmental Concern into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.

 

“Eurodollar”, when used in reference to any Loan or Advance, refers to whether such Loan, or the Loans comprising such Advance, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

 

“Excluded Taxes” means, in the case of each Lender or applicable Lending Installation and the Agent, taxes (including income taxes and franchise taxes) as are measured by or imposed on its net income.

 

“Exhibit” refers to an exhibit to this Agreement, unless another document is specifically referenced.

 

“Existing Credit Agreement” means that certain Credit Agreement dated as of June 16, 2004 among the Borrower, JPMorgan Chase Bank (successor by merger to Bank One, NA) as Agent, and a syndicate of lenders.

 

“Existing LCs” means those Letters of Credit issued for the account of the Borrower prior to the date hereof and listed on Schedule 2 hereto.

 

“Extension Request” is defined in Section 2.20(a).

 

“Facility Increase Request” is defined in Section 2.5.3(i).

 

“Facility LC” is defined in Section 2.19.1.

 

“Facility LC Application” is defined in Section 2.19.3.

 

“Facility LC Collateral Account” is defined in Section 2.19.12.

 

“Facility Termination Date” means January 11, 2011 or any later date as may be specified as the Facility Termination Date in accordance with Section 2.20 or any earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof.

 

“Fed. Board” means the Board of Governors of the Federal Reserve System of the United States of America.

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it.

 

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“Financial LC” means any Letter of Credit (other than a Performance LC) that represents an irrevocable obligation on the part of the issuer (a) to repay money borrowed by or advanced to or for the account of the Borrower or a Subsidiary or (b) to make payment on account of any Indebtedness undertaken by the Borrower or a Subsidiary, in the event that the Borrower or Subsidiary fails to fulfill its obligation to the beneficiary.

 

“Financial Services Segment” means the business segment of the Borrower and its Subsidiaries engaged in mortgage banking (including the title and escrow business), homeowners’ insurance, mortgage servicing, securities issuance, bond administration and management services and related activities, which segment currently consists principally of the activities of Ryland Mortgage Company and its Subsidiaries but excludes the Limited-Purpose Subsidiaries.

 

“Finished Lots” means lots of Entitled Land as to which (a) a final subdivision map has been recorded; (b) all major off-site construction and infrastructure necessary to permit construction of Units has been completed to local governmental requirements; (c) utilities have been installed to local government requirements; and (d) building permits may be pulled and construction commenced without the satisfaction of any further material conditions.

 

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States, applied in a manner consistent with that used in preparing the financial statements referred to in Section 5.5.

 

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

 

“Guarantee Obligations” means, as to any Person (the “guaranteeing person”), any obligation of the guaranteeing person or another Person (including any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any indebtedness, leases, dividends or other obligations (the “primary obligations”) of any third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (1) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (2) to advance or supply funds (A) for the purchase or payment of any such primary obligations or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor or (C) to purchase property, securities or services for the purpose of assuring the owner of such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (D) otherwise to assure or hold harmless the owner of such primary obligation against loss in respect thereof; provided , however , that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation shall be deemed to be the maximum or stated amount of the primary obligation relating to such Guarantee Obligation (or, if less, the maximum stated liability set forth in the instrument

 

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embodying such Guarantee Obligation), provided , however , that in the absence of any such stated amount or stated liability, the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as reasonably determined by the Borrower in good faith.

 

“Guarantor” means (a) the Subsidiaries of Borrower identified on Schedule 3 hereto and (b) any Subsidiary that hereafter guarantees the Obligations, subject, in the case of either (a) or (b) to release of an entity as a Guarantor as provided in Section 6.9(b).

 

“Guaranty” means that certain Guaranty of even date herewith in the form of Exhibit B hereto executed by the Guarantors in favor of the Agent, for the ratable benefit of the Lenders, as it may be amended, modified or supplemented (including by delivery of a Supplemental Guaranty) and in effect from time to time.

 

“Hedge Agreement” means, as to any Person, any swap, cap, collar or similar arrangement entered into by such Person providing for protection against fluctuations in interest rates or currency exchange rates or the exchange of nominal interest obligations, either generally or under specific contingencies.

 

“Hedge Agreement Termination Value” means, in respect of any one or more Hedge Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Agreements, (a) for any date on or after the date such Hedge Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedge Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedge Agreements (which may include a Lender or any Affiliate of a Lender).

 

“Homebuilding Segment” means the business segment of the Borrower and its Subsidiaries engaged in the construction and sale of single-family attached and unattached dwellings and related activities, including all activities of the Borrower outside the Financial Services Segment but excluding the Limited-Purpose Subsidiaries.

 

“Home Proceeds Receivable” means, with respect to the Borrower or a Guarantor, funds due to the Borrower or such Guarantor held at an escrow or title company (including an escrow or title company which is a Subsidiary of the Borrower) following the sale and conveyance of title of a Unit to a buyer.

 

“Improvements” means on and off-site development work, including but not limited to filling to grade, main water distribution and sewer collection systems and drainage system installation, paving, and other improvements necessary for the use of residential dwelling units and as required pursuant to development agreements which may have been entered into with Governmental Authorities.

 

“Increase Date” is defined in Section 2.5.3(ii).

 

“Indebtedness” of any Person means all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:  (a) all obligations of such Person for

 

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borrowed money; (b) all obligations of such Person for the deferred purchase price of Property or services (other than trade liabilities due 90 days or less from invoice and accrued expenses incurred in the ordinary course of business and payable in accordance with customary practices); (c) all net obligations of such Person under any Hedge Agreement (measured as the Hedge Agreement Termination Value thereof); (d) any other obligations of such Person evidenced by a note, bond, debenture or similar instrument; (e) all Capitalized Lease Obligations of such Person; (f) all obligations, contingent or otherwise, of such Person in respect of Letters of Credit (excluding Performance LCs not yet drawn upon) and acceptances issued or created for the account of such Person; (g) all liabilities secured by any lien on any Property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof; (h) all Guarantee Obligations of such Person; (i) such Person’s Unfunded Liabilities; and (j) any other obligation for borrowed money or other financial accommodations which in accordance with GAAP would be shown as a liability on the consolidated balance sheet of such Person.  For all purposes hereof, the Indebtedness of any Person shall include its pro rata share of the Indebtedness of any Joint Venture in which such Person holds an interest.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Insolvency” or “Insolvent” means, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

 

“Interest Period” means with respect to any Eurodollar Advance, the period commencing on the date of such Advance and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided , that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of an Advance initially shall be the date on which such Advance is made and thereafter shall be the effective date of the most recent conversion or continuation of such Advance.

 

“Investment” of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; any deposit accounts and certificate of deposit owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person.

 

“Investment Grade Rating” means a rating of the Borrower’s unsecured senior public debt of BBB- or higher from S&P or Baa3 or higher from Moody’s.

 

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“Joint Venture” means an entity (whether a partnership, joint venture, limited liability company or other form of business organization) in which the Borrower or a Subsidiary owns an interest but which is not a Subsidiary of the Borrower.

 

“JPMorgan Chase Bank” means JPMorgan Chase Bank, N.A., in its individual capacity, (and its successors).

 

“Land Under Development” means Entitled Land upon which a final subdivision map has been recorded and upon which construction of Improvements has commenced and is being diligently pursued but has not been completed.

 

“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents.

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Facility LCs at such time plus (b) the aggregate amount of all Reimbursement Obligations that have not yet been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Lender at any time shall be its Pro Rata Share of the total LC Exposure at such time.

 

“LC Fee” is defined in Section 2.19.4.

 

“LC Issuer” means JPMorgan Chase Bank (or any subsidiary or affiliate of JPMorgan Chase Bank designated by JPMorgan Chase Bank and acceptable to the Borrower), any other Lender that is the issuer of an Existing LC and any other Lender that, at the request of the Borrower and with the approval of the Agent, shall agree to issue Facility LCs, each in its capacity as issuer of Facility LCs hereunder.

 

“LC Payment Date” is defined in Section 2.19.6.

 

“Lenders” means the Persons listed on Schedule 1 and any other Person that shall have become a party hereto pursuant to a Commitment and Acceptance or an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.  Unless the context otherwise requires, the term “Lenders” includes the Swing Line Lender.

 

“Lending Installation” means, with respect to a Lender or the Agent, the office, branch, subsidiary or affiliate of such Lender or the Agent listed on the signature pages hereof or on a Schedule or otherwise selected by such Lender or the Agent pursuant to Section 2.17.

 

“Letter of Credit” of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable.

 

“Leverage Ratio” means, at any date, the ratio of (a) Consolidated Indebtedness at such date to (b) the sum of Consolidated Indebtedness and Consolidated Tangible Net Worth at such date.

 

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“LIBO Rate” means, with respect to any Eurodollar Advance for any Interest Period, the rate appearing on Telerate Page 3750 (formerly the Dow Jones Market Service) or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market, at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available at such time for any reason, then the “ LIBO Rate ” with respect to such Eurodollar Advance for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

 

“Lien” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).

 

“Limited-Purpose Subsidiaries” means subsidiaries of the Borrower included within the Limited-Purpose Subsidiaries Segment.

 

“Limited-Purpose Subsidiaries Segment” means the business segment of the Borrower and its Subsidiaries which facilitates, through special-purpose entities created or existing solely for such purpose, the financing of mortgage loans and mortgage-backed securities and the securitization of mortgage loans and other related activities.

 

“Loan Documents” means this Agreement, the Facility LC Applications, the Swing Line Note, any Notes issued pursuant to Section 2.13 and the Guaranty.

 

“Loans” means, the loans made by the Lenders or Swing Line Lender pursuant to this Agreement (including any conversion or continuation of a Eurodollar Loan).

 

“Material Adverse Effect” means a material adverse effect on (i) the business or financial condition of the Borrower and its Restricted Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents to which it is a party, or (iii) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent, the LC Issuers or the Lenders thereunder.

 

“Material Indebtedness” means Indebtedness in an outstanding principal amount of $10,000,000 or more in the aggregate.

 

“Material Indebtedness Agreement” means any agreement to which the Borrower or any Guarantor is a party (or is otherwise obligated in respect thereof) under which any Indebtedness was created or is governed, which Indebtedness has an outstanding principal balance of $10,000,000 or more or which provides for the incurrence of Indebtedness on a revolving basis

 

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in an amount which would constitute Material Indebtedness (whether or not an amount of Indebtedness constituting Material Indebtedness is outstanding thereunder).

 

“Materials of Environmental Concern” means any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls, urea-formaldehyde insulation and mold.

 

“Model Unit” means a Completed Unit to be used as a model home in connection with the sale of Units in a residential housing project.

 

“Modify” and “Modification” are defined in Section 2.19.1.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which the Borrower or any member of the Controlled Group is a party to which more than one employer is obligated to make contributions.

 

“New Lender” is defined in Section 2.5.3(i).

 

“Non-Recourse Indebtedness” means, with respect to any Person, any Indebtedness of such Person for which the owner of such Indebtedness has no recourse, directly or indirectly, to such Person for the principal of, premium, if any, and interest on such Indebtedness, and for which such Person is not directly or indirectly obligated or otherwise liable for the principal of, premium, if any, and interest on such Indebtedness, except pursuant to Liens on Property to which such Indebtedness relates, provided that recourse obligations or liabilities solely for fraud, environmental matters and other customary “non-recourse carve-outs” in respect of any Indebtedness will not prevent Indebtedness from being classified as Non-Recourse Indebtedness.

 

“Non-U.S. Lender” means any Lender that is organized under the laws of a jurisdiction other than that the United States of America, any State thereof or the District of Columbia.

 

“Note” is defined in Section 2.13(iv).

 

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to the Lenders or to any Lender, the Agent, any LC Issuer, the Swing Line Lender or any indemnified party arising under the Loan Documents.

 

“Other Taxes” is defined in Section 3.5(ii).

 

“Participant” is defined in Section 12.2(a).

 

“Payment Date” means the first day of each calendar month.

 

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

 

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“Performance LC” means a Letter of Credit issued by a Lender or other Person for the account of the Borrower or a Subsidiary to a party, as beneficiary, to which the Borrower, or such Subsidiary owes certain performance obligations in connection with its real estate development and homebuilding activity in the ordinary course of business (for example, to a municipality, as beneficiary, to support the Borrower’s or a Subsidiary’s obligation to widen public streets in connection with a residential development project).  A direct pay Letter of Credit to support community improvement bonds associated with the Borrower’s residential development operations is a Financial LC and not a Performance LC.

 

“Person” means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof.

 

“Plan” means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any member of the Controlled Group may have any liability.

 

“Pricing Schedule” means the Schedule attached hereto identified as such.

 

“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

 

“Property” of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.

 

“Pro Rata Share” means, with respect to a Lender, a portion equal to a fraction the numerator of which is such Lender’s Commitment and the denominator of which is the Aggregate Commitment.

 

“Quarterly Payment Date” is defined in Section 2.19.4.

 

“Raw Land” means Raw Land — Entitled and Raw Land — Unentitled.

 

“Raw Land — Entitled” means land not under development which is Entitled Land.

 

“Raw Land — Unentitled” means land not under development which is not Entitled Land but which the Borrower in its reasonable commercial judgment believes it will be able to develop as residential property for its own use and not to be held speculatively.

 

“Real Estate Inventory” means Construction in Progress, Completed Units (including Model Units), Finished Lots, Land Under Development, Raw Land — Entitled, and Raw Land — Unentitled.

 

“Refinancing Indebtedness” means, with respect to any specified Indebtedness, Indebtedness that refinances such specified Indebtedness but does not increase the amount thereof.

 

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“Register” has the meaning set forth in Section 12.1(b)(iv).

 

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.

 

“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System.

 

“Regulation X” means Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by foreign lenders for the purpose of purchasing or carrying margin stock.

 

“Reimbursement Obligations” means, at any time, the aggregate of all obligations of the Borrower then outstanding under Section 2.19 to reimburse the LC Issuers for amounts paid by the LC Issuers in respect of any one or more drawings under Facility LCs.

 

“Rejecting Lender” is defined in Section 2.20(a).

 

“Rejecting Lender’s Facility Termination Date” is defined in Section 2.20(a).

 

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

 

“Reorganization” means, with respect to any Multiemployer Plan, the condition that such Plan is in reorganization within the meaning of Section 241 of ERISA.

 

“Replacement Lender” is defined in Section 2.21(a).

 

“Reportable Event” means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided , however , that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.

 

“Reports” is defined in Section 9.6.

 

“Required Lenders” means Lenders in the aggregate having at least 66 2/3% of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the

 

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aggregate holding at least 66-2/3% of the aggregate unpaid principal amount of the Aggregate Credit Exposure.

 

“Requirement of Law” means, as to any Person, any Law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.

 

“Responsible Official” means (a) with respect to the Borrower, any of the chief executive officer, president or chief financial officer of the Borrower or, with respect to financial matters, the chief accounting officer or the treasurer of the Borrower and (b) with respect to a Guarantor, any of the chief executive officer, the president, any vice president or the treasurer of such Guarantor.

 

“Restricted Payments” is defined in Section 6.16.

 

“Restricted Subsidiary” means any Subsidiary of the Borrower other than (a) Limited-Purpose Subsidiaries, (b) those Subsidiaries identified on Schedule 5.4 as not being Restricted Subsidiaries and (c) any Subsidiary that the Required Lenders agree in writing is not to be deemed a Restricted Subsidiary.

 

“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure and Swing Line Exposure at such time.

 

“Revolving Loan” means a Loan made pursuant to Section 2.1.

 

“Ryland Financial Division” means all Subsidiaries and operations of the Borrower and its Subsidiaries other than the Homebuilding Segment.

 

“Ryland Mortgage Company” means Ryland Mortgage Company, an Ohio corporation.

 

“S&P” means Standard and Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc.

 

“Schedule” refers to a specific schedule to this Agreement, unless another document is specifically referenced.

 

“Section” means a numbered section of this Agreement, unless another document is specifically referenced.

 

“Senior Permitted Debt” means (without duplication) the Obligations, the LC Exposure and all Indebtedness of the Borrower or the Guarantors (specifically excluding the Indebtedness of any Subsidiary that is not a Guarantor) senior to or ranking in equal priority to the Obligations, other than (a) Indebtedness that is secured by any Property that would have been included in the Borrowing Base if such asset were not subject to or encumbered by a Lien, (b) Indebtedness which is Non-Recourse Indebtedness of the Borrower and its Subsidiaries and (c) 

 

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with respect to purchase money Indebtedness, such Indebtedness for which recourse is limited solely to the Property financed with the proceeds of such Indebtedness.

 

“Single Employer Plan” means a Plan maintained by the Borrower or any member of the Controlled Group for employees of the Borrower or any member of the Controlled Group.

 

“Sold” means, with respect to any item of Real Estate Inventory, that (a) a third party purchase contract has been executed for such item of Real Estate Inventory; (b) the third party purchaser for such item of Real Estate Inventory has made a cash deposit for such item (except that up to 1% of Real Estate Inventory at any time may be deemed “Sold” even if such deposit has not been made); and (c) such third party purchaser’s obligation to purchase such item of Real Estate Inventory pursuant to such third party purchase contract is not subject to any contingencies other than the contingency that it shall have obtained mortgage financing or that it shall have sold other identified property.

 

“Specified Debt” means the Borrower’s senior debt securities issued pursuant to the Borrower’s Registration Statements on Form S-3 (Registration Nos. 333-03791, 333-58208, 333-100167, 333-121469 and 333-12400) or any subsequent registration statement and whether outstanding on the date of this Agreement or hereafter incurred.

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Fed. Board to which the Agent is subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal time deposits in dollars of over $100,000 with maturities approximately equal to three months and (b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Fed. Board).  Such reserve percentages shall include those imposed pursuant to Regulation D.  Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

“Subordinated Debt” means (a) Indebtedness of the Borrower outstanding on the date hereof issued pursuant to the Subordinated Debt Indentures and (b) any other unsecured Indebtedness of the Company that is contractually subordinated in right of payment and otherwise to the Obligations upon terms and conditions that, in the reasonable determination of the Agent, are consistent with those set forth in the Subordinated Debt Indentures or upon other terms and conditions satisfactory to the Required Lenders.

 

“Subordinated Debt Indenture” means the Indenture, dated as of June 12, 2001, between the Borrower and SunTrust Bank, as trustee, pursuant to which the Borrower’s 9-1/8% Senior Subordinated Notes due June, 2011 were issued.

 

“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled,

 

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directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.  Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of the Borrower.

 

“Substantial Portion” means, with respect to the Property of the Borrower and its Subsidiaries, Property which represents more than 10% of the consolidated assets of the Borrower and its Subsidiaries or property which is responsible for more than 10% of the consolidated net sales or of the consolidated net income of the Borrower and its Subsidiaries, in each case, as would be shown in the consolidated financial statements of the Borrower and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made (or if financial statements have not been delivered hereunder for that month which begins the twelve-month period, then the financial statements delivered hereunder for the quarter ending immediately prior to that month).

 

“Supplemental Guaranty” means a Supplemental Guaranty in the form provided for in, and attached to, the Guaranty.

 

“Swing Line Commitment” means the commitment of the Swing Line Lender to make Swing Line Loans pursuant to Section 2.22(a) hereof.  The Swing Line Commitment is in the amount of $75,000,000.

 

“Swing Line Exposure” means, at any time, the aggregate principal amount of all Swing Line Loans outstanding at such time.  The Swing Line Exposure of any Lender at any time shall be its Pro Rata Share of the total Swing Line Exposure at such time.

 

“Swing Line Lender” means JPMorgan Chase Bank or any assignee to which JPMorgan Chase Bank assigns the Swing Line Commitment in accordance with Section 12.1 hereof.

 

“Swing Line Loan” is defined in Section 2.22(a).

 

“Swing Line Note” is defined in Section 2.22(a).

 

“Taxes” means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes and Other Taxes.

 

“Third Party LC” means a Letter of Credit issued for the account of the Borrower or a Subsidiary (other than a Facility LC).  A Third Party LC may be either a Financial LC or a Performance LC.

 

“Three-Month Secondary CD Rate” means, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day is not a Business Day, the next preceding Business Day) by the Fed. Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519)

 

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during the week following such day) or, if such rate is not so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 a.m., New York City time, on such day (or, if such day is not a Business Day, on the next preceding Business Day) by the Agent from three negotiable certificate of deposit dealers of recognized standing selected by it.

 

“Transferee” is defined in Section 12.4.

 

“Type”, when used in reference to any Loan or Advance, refers to whether the rate of interest on such Loan, or on the Loans comprising such Advance, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

“Unencumbered Real Estate Inventory” means Real Estate Inventory which is not subject to or encumbered by any deed of trust, mortgage, judgment lien, attachment lien or any other Lien (other than (a) liens which have been bonded over so as to remove such liens as encumbrances against the Real Estate Inventory, (b) liens for taxes not yet due or which are being contested, provided that adequate reserves are maintained, (c) mechanic’s liens and similar liens arising in the ordinary course of business that are not overdue for a period of more than 60 days or that are being contested in good faith and (d) easements, rights of way, restrictions and other similar encumbrances incurred during the ordinary course of business which, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the applicable Property or materially interfere with the ordinary conduct of the business of the Borrower or Guarantor that owns the applicable Property.

 

“Unfunded Liabilities” means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations.

 

“Unit” means a single-family residential housing unit available for sale.

 

“Unmatured Default” means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default.

 

“Unsold” means, with respect to any item of Real Estate Inventory, that such item of Real Estate Inventory is not Sold.

 

“Unsold Housing Inventory” means, collectively, Unsold Construction in Progress, Unsold Units and Unsold Model Units.

 

“Wholly-Owned Subsidiary” of a Person means (i) any Subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.

 

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1.2            Classification of Loans and Advances .  For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g. , a “Revolving Loan”) or by Type ( e.g. , a “Eurodollar Loan”) or by Class and Type ( e.g. , a “Eurodollar Revolving Loan”).  Advances also may be classified and referred to by Class ( e.g. , a “Revolving Advance”) or by Type ( e.g. , a “Eurodollar Advance”) or by Class and Type ( e.g. , a “Eurodollar Revolving Advance”).

 

1.3            Terms Generally .  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

ARTICLE II

 

THE CREDITS

 

2.1            Commitment .  From and including the date of this Agreement and prior to the Facility Termination Date, each Lender severally agrees, on the terms and conditions set forth in this Agreement, to (i) make Revolving Loans to the Borrower and (ii) participate in Facility LCs issued upon the request of the Borrower (including the Existing LCs) and in Swing Line Loans, provided that, after giving effect to the making of each such Revolving Loan and each Swing Line Loan and the issuance of each such Facility LC (including the participations in the Existing LCs), (a) such Lender’s Revolving Credit Exposure shall not exceed its Commitment and (b) the Aggregate Credit Exposure does not exceed the Aggregate Commitment.  Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow the Loans at any time prior to the Facility Termination Date.  The Commitments to extend credit hereunder shall expire on the Facility Termination Date.  The LC Issuers will issue Facility LCs hereunder on the terms and conditions set forth in Section 2.19.

 

2.2            Required Payments; Termination .  The Aggregate Credit Exposure and all other unpaid Obligations shall be paid in full by the Borrower on the Facility Termination Date.

 

2.3            Ratable Revolving Loans .  Each Advance hereunder shall consist of Revolving Loans made from the several Lenders ratably in proportion to the ratio that their respective Commitments bear to the Aggregate Commitment.

 

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2.4            Types of Advances .  The Advances may be ABR Advances or Eurodollar Advances, or a combination thereof, selected by the Borrower in accordance with Sections 2.8 and 2.9.

 

2.5            Commitment Fee; Reductions and Increases in Aggregate Commitment .

 

2.5.1         Commitment Fee .  The Borrower agrees to pay to the Agent for the account of each Lender a commitment fee (the “Commitment Fee”) at a per annum rate equal to the Applicable Fee Rate on the daily unused portion of such Lender’s Commitment from the date hereof to and including the Facility Termination Date, payable in arrears on each Quarterly Payment Date hereafter and on the Facility Termination Date.  For purposes of determining the Commitment Fee payable to the Swing Line Lender, its Swing Line Loans shall be treated as usage of its Commitment.

 

2.5.2         Reduction in Aggregate Commitment .  The Borrower may permanently reduce the Aggregate Commitment in whole, or in part ratably among the Lenders in the minimum amount of $10,000,000 (and in multiples of $1,000,000 in excess thereof), upon at least five Business Days’ written notice to the Agent, which notice shall specify the amount of any such reduction, provided , however , that the amount of the Aggregate Commitment may not be reduced below the Aggregate Credit Exposure.  All accrued Commitment Fees and LC Fees shall be payable on the effective date of any termination of the obligations of the Lenders to make Credit Extensions hereunder.

 

2.5.3         Increases in Aggregate Commitment .

 

(i)             Subject to the provisions of this Section 2.5.3, the Borrower may, at any time and from time to time, make a request (a “Facility Increase Request”), by notice to the Agent, for the Agent’s approval of an increase of the Aggregate Commitment within the limitations hereinafter set forth, which Facility Increase Request shall set forth the amount of such requested increase.  Within twenty (20) days of such Facility Increase Request, Agent shall advise Borrower of its approval or disapproval thereof; failure to so advise Borrower shall constitute disapproval.  Upon approval of the Agent, the Aggregate Commitment may be so increased either by having one or more financial institutions (other than the Lenders then holding a Commitment hereunder) approved in writing by the Borrower and the Agent (each, a “New Lender”) become Lenders hereunder and/or by having any one or more of Lenders then holding a Commitment hereunder (at their respective election in their sole discretion) that have been approved in writing by the Borrower and the Agent increase the amount of their Commitments (any such Lender that elects to increase its Commitment and any New Lender being hereinafter referred to as an “Additional Lender”), provided that (A) on the applicable Increase Date, (1) no Default or Unmatured Default shall then exist nor would occur immediately after giving effect to such increase and (2) the representations and warranties contained in Article V and in the Guaranty are true and correct except to the extent any such representation or

 

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warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date, (B) unless otherwise agreed by the Borrower and the Agent, the Commitment of any New Lender shall not be less than $5,000,000 (and, if in excess thereof, in integral multiples of $1,000,000), (C) unless otherwise agreed by the Borrower and the Agent, the increase in the Commitment of any Lender shall be not less than $5,000,000 (and, if in excess thereof, in integral multiples of $1,000,000); (D) after giving effect to such increase, the Aggregate Commitment shall not exceed $1,500,000,000; (E) the Borrower and each Additional Lender shall have executed and delivered a commitment and acceptance (the “Commitment and Acceptance”) substantially in the form of Exhibit C hereto, and the Agent shall have accepted and executed the same; (F) the Borrower shall have executed and delivered to the Agent a Note payable to the order of each Additional Lender that requests a Note, each such Note to be in the amount of such Additional Lender’s Commitment or increased Commitment (as applicable); (G) the Borrower shall have delivered to the Agent opinions of counsel (substantially similar to the forms of opinion referred to in Section 4.1(v), modified to apply to the increase in the Aggregate Commitment and each Note and Commitment and Acceptance executed and delivered in connection therewith); (H) each of the Guarantors shall have consented in writing to the new Commitments or increases in Commitments (as applicable) and shall have agreed that its Guaranty continues in full force and effect; and (I) the Borrower and each Additional Lender shall otherwise have executed and delivered such other instruments and documents as the Agent shall have reasonably requested in connection with such new Commitment or increase in the Commitment (as applicable).  The form and substance of the documents required under clauses (E) through (I) above shall be fully acceptable to the Agent.  The Agent shall promptly provide written notice to the Lenders following any such increase in the Aggregate Commitment.

 

(ii)            On the effective date of any increase in the Aggregate Commitment pursuant to the provisions hereof (“Increase Date”), which Increase Date shall be mutually agreed upon by Borrower, each Additional Lender and the Agent, each Additional Lender shall make a payment to the Agent in an amount sufficient, upon the application of such payments by all Additional Lenders to the reduction of the outstanding ABR Advances held by the Lenders, to cause the principal amount outstanding under the ABR Loans made by all Lenders (including any Additional Lender) to be in the proportion of their respective Commitments (as of such Increase Date).  The Borrower hereby irrevocably authorizes each Additional Lender to fund to the Agent the payment required to be made pursuant to the immediately preceding sentence for application to the reduction of the outstanding ABR Loans held by each Lender, and each such payment shall constitute an ABR Loan hereunder.  Such Additional Lender shall not participate in any Eurodollar Advance outstanding on the Increase Date,

 

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but, if the Borrower shall at any time on or after such Increase Date convert or continue any Eurodollar Advance outstanding on such Increase Date, the Borrower shall be deemed to repay such Eurodollar Advance on the date of the conversion or continuation thereof and then to reborrow as a Eurodollar Advance a like amount on such date so that each Additional Lender shall make a Eurodollar Loan on such date in its Pro Rata Share of such Eurodollar Advance.  Each Additional Lender shall also make a Revolving Loan in the amount of its Pro Rata Share of all Advances made on or after such Increase Date and shall otherwise have all of the rights and obligations of a Lender hereunder on and after such Increase Date.  Notwithstanding the foregoing, upon the occurrence of a Default prior to the date on which an Additional Lender is holding Revolving Loans equal to its Pro Rata Share of all Advances hereunder, such Additional Lender shall, upon notice from the Agent, on or after the date on which the Obligations are accelerated or become due following such Default, pay to the Agent (for the account of the other Lenders, to which the Agent shall pay their Pro Rata Shares upon receipt) a sum equal to such Additional Lender’s Pro Rata Share of each Advance then outstanding with respect to which such Additional Lender does not then hold a Revolving Loan equal to its Pro Rata Share thereof.

 

(iii)           On the Increase Date and the making of the Loans by an Additional Lender in accordance with the provisions of the first sentence of Section 2.5.3(ii), such Additional Lender shall also be deemed to have irrevocably and unconditionally purchased and received, without recourse or warranty, from the Lenders party to this Agreement immediately prior to the Increase Date, an undivided interest and participation in any Facility LC then outstanding, ratably, such that all Lenders (including each Additional Lender) hold participation interests in each such Facility LC in the proportion of their respective Commitments (as so increased).

 

(iv)           Nothing contained herein shall constitute, or otherwise be deemed to be, a commitment or agreement on the part of any Lender to increase its Commitment hereunder at any time or a commitment or agreement on the part of the Borrower or the Agent to give or grant any Lender the right to increase its Commitment hereunder at any time.

 

2.6            Minimum Amount of Each Advance .  Each Advance shall be in the minimum amount of $5,000,000 (and in multiples of $500,000 in excess thereof), provided , however , that any ABR Advance may be in the amount of the unused Aggregate Commitment.

 

2.7            Optional Principal Payments .  The Borrower may from time to time pay, without penalty or premium, all outstanding ABR Advances, or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $500,000 in excess thereof, any portion of the outstanding ABR Advances upon prior notice to the Agent not later than noon (Central time) on the day of prepayment.  The Borrower may from time to time pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, all outstanding

 

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Eurodollar Advances, or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $500,000 in excess thereof, any portion of the outstanding Eurodollar Advances upon not less than five (5) Business Days’ prior notice to the Agent.

 

2.8            Method of Selecting Types and Interest Periods for New Advances .  The Borrower shall select the Type of Advance and, in the case of each Eurodollar Advance, the Interest Period applicable thereto from time to time.  The Borrower shall give the Agent irrevocable notice (a “Borrowing Notice”) from an Authorized Person not later than noon (Central time) on the Borrowing Date of each ABR Advance and noon (Central time) three Business Days before the Borrowing Date for each Eurodollar Advance, specifying:

 

(i)             the Borrowing Date, which shall be a Business Day, of such Advance,

 

(ii)            the aggregate amount of such Advance,

 

(iii)           the Type of Advance selected, and

 

(iv)           in the case of each Eurodollar Advance, the Interest Period applicable thereto.

 

Not later than 2:00 p.m. (Central time) on each Borrowing Date, each Lender shall make available its Revolving Loan or Revolving Loans in funds immediately available in Houston, Texas to the Agent at its address specified pursuant to Article XIII (or otherwise provided by the Agent to the Lenders).  The Agent will make the funds so received from the Lenders available to the Borrower at the Agent’s aforesaid address.

 

2.9            Conversion and Continuation of Outstanding Advances .  ABR Advances shall continue as ABR Advances unless and until such ABR Advances are converted into Eurodollar Advances pursuant to this Section 2.9 or are repaid in accordance with Section 2.7.  Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Interest Period therefor, at which time such Eurodollar Advance shall be automatically converted into an ABR Advance unless (x) such Eurodollar Advance is or was repaid in accordance with Section 2.7 or (y) the Borrower shall have given the Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another Interest Period.  Subject to the limitations set forth in Section 2.6, the Borrower may elect from time to time to convert all or any part of an ABR Advance into a Eurodollar Advance.  The Borrower shall give the Agent irrevocable notice (a “Conversion/Continuation Notice”) from an Authorized Person of each conversion of an ABR Rate Advance into a Eurodollar Advance or continuation of a Eurodollar Advance not later than noon (Central time) at least three Business Days prior to the date of the requested conversion or continuation, specifying:

 

(i)             the requested date, which shall be a Business Day, of such conversion or continuation,

 

(ii)            the aggregate amount and Type of the Advance which is to be converted or continued, and

 

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(iii)           the amount of such Advance which is to be converted into or continued as a Eurodollar Advance and the duration of the Interest Period applicable thereto.

 

2.10          Changes in Interest Rate, etc .  Each ABR Advance shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Advance is made or is automatically converted from a Eurodollar Advance into an ABR Advance pursuant to Section 2.9, to but excluding the date it is paid or is converted into a Eurodollar Advance pursuant to Section 2.9 hereof, at a rate per annum equal to the Alternate Base Rate for such day.  Each Swing Line Loan shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Swing Line Loan is made, to but excluding the date it is paid, at a rate per annum equal to the Alternate Base Rate for such day.  Changes in the rate of interest on that portion of any Advance maintained as an ABR Advance and on any Swing Line Loan will take effect simultaneously with each change in the Alternate Base Rate.  Each Eurodollar Advance shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at a rate per annum equal to be Adjusted LIBO Rate plus the Applicable Margin, as determined by the Agent as applicable to such Eurodollar Advance based upon the Borrower’s selections under Sections 2.8 and 2.9 and otherwise in accordance with the terms hereof.  No Interest Period may end after the Facility Termination Date.

 

2.11          Rates Applicable After Default .  Notwithstanding anything to the contrary contained in Section 2.8, 2.9 or 2.10, during the continuance of a Default or Unmatured Default the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that no Advance may be made as, converted into or continued as a Eurodollar Advance.  During the continuance of a Default the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that (i) each Eurodollar Advance shall bear interest for the remainder of the applicable Interest Period at the rate otherwise applicable to such Interest Period plus 2% per annum, and (ii) each ABR Advance and Swing Line Loan shall bear interest at a rate per annum equal to the Alternate Base Rate in effect from time to time plus 2% per annum, and (iii) the LC Fee shall be increased by 2% per annum, provided that, during the continuance of a Default under Section 7.6 or 7.7, the interest rates set forth in clauses (i) and (ii) above and the increase in the LC Fee set forth in clause (iii) above shall be applicable to all Credit Extensions without any election or action on the part of the Agent or any Lender.

 

2.12          Method of Payment .  All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in immediately available funds to the Agent at the Agent’s address specified pursuant to Article XIII, or at any other Lending Installation of the Agent specified in writing by the Agent to the Borrower, by 2:00 p.m. (Central time) on the date when due and shall be applied ratably by the Agent among the Lenders.  Each payment delivered to the Agent for the account of any Lender shall (except in the case of Reimbursement Obligations for which an LC Issuer has not been fully indemnified by the Lenders, or as otherwise specifically required hereunder) be applied ratably by the Agent among the Lenders. 

 

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Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at its address specified pursuant to Article XIII or at any Lending Installation specified in a notice received by the Agent from such Lender.  If the Agent receives, for the account of a Lender, a payment from the Borrower and fails to remit such payment to such Lender on the Business Day such payment is received (if received by 2:00 p.m. ( Central time) by the Agent) or on the next Business Day (if received after 2:00 p.m. (Central time) by the Agent), the Agent shall pay to such Lender interest on such payment at a rate per annum equal to the Federal Funds Effective Rate for each of the first three days for which such payment is so delayed and thereafter at the rate applicable to the relevant Loan.  The Agent is hereby authorized to charge the account of the Borrower maintained with JPMorgan Chase Bank for each payment of principal, interest, Reimbursement Obligations and fees that the Borrower is obligated to pay as such payment becomes due hereunder.  Each reference to the Agent in this Section 2.12 shall also be deemed to refer, and shall apply equally, to the LC Issuers, in the case of payments required to be made by the Borrower to the LC Issuers pursuant to Section 2.19.7.

 

2.13          Noteless Agreement; Evidence of Indebtedness .  (i)  Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

 

(i)             The Agent shall also maintain accounts in which it will record (a) the amount of each Loan made hereunder, the Type thereof and the Interest Period with respect thereto and the amount of each Swing Line Loan made hereunder, (b) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender and the Swing Line Lender hereunder, (c) the original stated amount of each Facility LC and the amount of LC Exposure at any time and (d) the amount of any sum received by the Agent hereunder from the Borrower and each Lender’s share thereof and the amount thereof paid to the Swing Line Lender.

 

(ii)            The entries maintained in the accounts maintained pursuant to paragraphs (i) and (ii) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided , however , that the failure of the Agent or any Lender (or the Swing Line Lender) to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms.

 

(iii)           Any Lender may request that its Loans be evidenced by a promissory note in substantially the form of Exhibit D (a “Note”).  In such event, the Borrower shall prepare, execute and deliver to such Lender such Note payable to the order of such Lender.  Thereafter, the Loans evidenced by such Note and interest thereon shall at all times (prior to any assignment pursuant to Section 12.1) be represented by one or more Notes payable to the order of the payee named therein, except to the extent that any such Lender subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in paragraphs (i) and (ii) above.

 

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2.14          Telephonic and Facsimile Notices .  The Borrower hereby authorizes the Lenders and the Agent and the Swing Line Lender to extend, convert or continue Advances and Swing Line Loans, effect selections of Types of Advances and to transfer funds based on telephonic or facsimile notices made by any person or persons the Agent or any Lender in good faith believes to be acting on behalf of the Borrower, it being understood that the foregoing authorization is specifically intended to allow Borrowing Notices and Conversion/Continuation Notices to be given telephonically or by facsimile.  The Borrower agrees to deliver promptly to the Agent a written confirmation, if such confirmation is requested by the Agent or any Lender or Swing Line Lender, of each telephonic notice signed by an Authorized Person.  If the written confirmation differs in any material respect from the action taken by the Agent and the Lenders or Swing Line Lender, the records of the Agent and the Lenders or Swing Line Lender shall govern absent manifest error.

 

2.15          Interest Payment Dates; Interest and Fee Basis .  Interest accrued on each ABR Advance shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which the ABR Advance is prepaid, whether due to acceleration or otherwise, and on the Facility Termination Date.  Interest accrued on that portion of the outstanding principal amount of any ABR Advance converted into a Eurodollar Advance on a day other than a Payment Date shall be payable on the Payment Date following the date of such conversion.  Interest accrued on each Eurodollar Advance shall be payable on the last day of its applicable Interest Period, on any date on which the Eurodollar Advance is prepaid, whether by acceleration or otherwise, and at maturity.  Interest accrued on each Eurodollar Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period.  Commitment Fees and LC Fees and interest on Eurodollar Loans shall be calculated for actual days elapsed on the basis of a 360-day year; interest on ABR Loans and Swing Line Loans shall be calculated for actual days elapsed on the basis of a 365-day (or, if applicable, 366-day) year.  Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to 2:00 p.m. (Central time) in accordance with Section 2.12.  If any payment of principal of or interest on an Advance or Swing Line Loan shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment.

 

2.16          Notification of Advances, Interest Rates, Prepayments and Commitment Reductions .  Promptly after receipt thereof, the Agent will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice, and repayment notice received by it hereunder.  Promptly after notice from an LC Issuer of the issuance or Modification of a Facility LC, the Agent will notify each Lender of the issuance or Modification of such Facility LC.  The Agent will notify each Lender of the interest rate applicable to each Eurodollar Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate.

 

2.17          Lending Installations .  Each Lender may book its Revolving Loans and its participation in any Facility LC, the Swing Line Lender may book the Swing Line Loans and each LC Issuer may book the Facility LCs at any Lending Installation selected by such Lender, Swing Line Lender or LC Issuer, as the case may be, and may change its Lending Installation

 

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from time to time.  All terms of this Agreement shall apply to any such Lending Installation and the Loans, Swing Line Loans, Facility LCs, participations in Facility LCs and any Notes and the Swing Line Note issued hereunder shall be deemed held by each Lender, Swing Line Lender or LC Issuer, as the case may be, for the benefit of any such Lending Installation.  Each Lender, Swing Line Lender and LC Issuer may, by written notice to the Agent and the Borrower in accordance with Article XIII, designate replacement or additional Lending Installations through which Revolving Loans and Swing Line Loans will be made by it or Facility LCs will be issued by it and for whose account Loan payments or payments with respect to Facility LCs are to be made.

 

2.18          Non-Receipt of Funds by the Agent .  Unless the Borrower or a Lender, as the case may be, notifies the Agent (i) in the case of the Borrower, prior to the date on which it is scheduled to make a payment of principal, interest or fees to the Agent for the account of the Lenders or (ii) in the case of a Lender, prior to the date on which it is scheduled to make a Eurodollar Loan or 30 minutes prior to the time at which it is scheduled to make an ABR Loan, that it does not intend to make such payment, the Agent may assume that such payment has been made.  The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption.  If such Lender or the Borrower, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (x) in the case of payment by a Lender, the Federal Funds Effective Rate for such day for the first three days and, thereafter, the interest rate applicable to the relevant Loan or (y) in the case of payment by the Borrower, the interest rate applicable to the relevant Loan.

 

2.19          Facility LCs .

 

2.19.1       Issuance .  Each LC Issuer hereby agrees, on the terms and conditions set forth in this Agreement, to issue standby Letters of Credit (each such Letter of Credit and each Existing LC, a “Facility LC”) and to renew, extend, increase, decrease or otherwise modify each Facility LC (“Modify,” and each such action a “Modification”), from time to time from and including the date of this Agreement and prior to the Facility Termination Date upon the request of the Borrower; provided that immediately after each such Facility LC is issued or Modified, (i) the aggregate amount of the LC Exposure shall not exceed $600,000,000, (ii) the Aggregate Credit Exposure shall not exceed the Aggregate Commitment and (iii) if the Facility Termination Date shall have been extended pursuant to Section 2.20 with respect to some but not all of the Lenders, (A) the Aggregate Credit Exposure, less the portion of the LC Exposure attributable to Facility LCs expiring after the applicable Rejecting Lender’s Facility Termination Date, shall not exceed (B) the amount to which the Aggregate Commitment would be reduced upon such Rejecting Lender’s Facility Termination Date and provided , further , that with respect to each Modification (other than an increase or extension), the beneficiary under such Facility LC shall have consented in writing thereto.  No Facility LC shall have an expiry date later than the Facility Termination Date.

 

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2.19.2      Participations .  Upon the issuance or Modification by the LC Issuer of a Facility LC in accordance with this Section 2.19 (or, in the case of the Existing LC, on the Closing Date), the applicable LC Issuer shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably sold to each Lender, and each Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from such LC Issuer, a participation in such Facility LC (and each Modification thereof) and the related LC Exposure in proportion to its Pro Rata Share.

 

2.19.3      Notice .  Subject to Section 2.19.1, the Borrower shall give the applicable LC Issuer notice from an Authorized Person prior to noon (Central time) at least two (2) Business Days (or such lesser period to which an LC Issuer may agree) prior to the proposed date of issuance or Modification of each Facility LC, specifying the beneficiary, the proposed date of issuance (or Modification) and the expiry date of such Facility LC, and describing the proposed terms of such Facility LC and the nature of the transactions proposed to be supported thereby.  Upon receipt of such notice, such LC Issuer shall promptly notify the Agent.  Upon issuance of such Facility LC, the LC Issuer shall promptly notify the Agent and the Agent shall promptly notify each Lender of the issuance of such Facility LC and of the amount of such Lender’s participation in such Facility LC.  The issuance, renewal, extension or increase by an LC Issuer of any Facility LC shall be subject to the conditions precedent set forth in Article IV (the satisfaction of which the LC Issuer shall have no duty to ascertain).  The issuance or Modification by an LC Issuer of any Facility LC shall also be subject to the conditions precedent that such Facility LC shall be satisfactory to the LC Issuer and that the Borrower shall have executed and delivered such application agreement and/or such other instruments and agreements relating to such Facility LC as the LC Issuer shall have reasonably requested (each, a “Facility LC Application”).  In the event of any conflict between the terms of this Agreement and the terms of any Facility LC Application, the terms of this Agreement shall control.  The LC Issuer shall not issue, renew, extend or increase any Facility LC hereunder if it has received written notice from the Agent, the Borrower or the Required Lenders, prior to the requested date of issuance, renewal, extension or increase of the applicable Facility LC, that one or more applicable conditions contained in Section 4.2 shall not be satisfied.

 

2.19.4      Compensation for Facility LCs .  The Borrower agrees to pay to the Agent, in the case of each Facility LC, a fee (the “LC Fee”) therefor, in an amount per annum equal to the Applicable Margin on the amount of such Facility LC, payable quarterly in arrears not later than five (5) Business Days following the Agent’s delivery to Borrower of the quarterly statement specifying the amount of the LC Fees properly due and payable hereunder with respect to the preceding calendar quarter (each date on which such payment is due being herein referred to as a “Quarterly Payment Date”) and on the Facility Termination Date (which payment shall be in the amount of all accrued and unpaid Facility LC Fees).  LC Fees shall be calculated, on a pro rata basis for the period to which such payment applies, for actual days on which such Facility LC was outstanding during such period, on the basis of a 360-day year.  The Agent shall, with reasonable promptness following receipt from all LC Issuers of the reports provided for in Section 2.19.5 for the months of March, June, September and December, respectively,

 

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deliver to the Borrower a quarterly statement of the LC Fees then due and payable.  The Agent shall promptly remit such LC Fees, when received by the Agent, as follows:  (i) to each LC Issuer, solely for its own account, with respect to each Facility LC issued by such LC Issuer, an amount per annum equal to the product of (A) 0.125% per annum and (B) the face amount of such Facility LC and (ii) to all Lenders, ratably, the balance of such LC Fees.  LC Fees shall be payable hereunder with respect to the Existing LCs from and after the Closing Date.  Each LC Issuer shall also have the right to charge the Borrower, solely for such LC Issuer’s own account, customary processing fees, charges and expenses of issuing and servicing Facility LCs.

 

2.19.5      LC Issuer Reporting Requirements .  Each LC Issuer shall, no later than the third (3 rd ) Business Day following the last day of each month, provide to the Agent a schedule of the Facility LCs issued by it showing the issuance date, account party, original face amount, amount (if any) paid thereunder, expiration date and the reference number of each Facility LC outstanding at any time during such month (and indicating, with respect to each Facility LC, whether it is a Financial LC or a Performance LC) and the aggregate amount (if any) payable by the Borrower to such LC Issuer during the month pursuant to Sections 3.1 and 3.2.  Copies of such reports shall be provided promptly to each Lender by the Agent.  The reporting requirements hereunder are in addition to those set forth in Section 2.19.3.

 

2.19.6      Administration; Reimbursement by Lenders .  Upon receipt by an LC Issuer from the beneficiary of any Facility LC of any demand for payment under such Facility LC, such LC Issuer shall notify the Agent and the Agent shall promptly notify the Borrower and each other Lender as to the amount to be paid by such LC Issuer as a result of such demand and the proposed payment date (the “LC Payment Date”).  The responsibility of the LC Issuer to the Borrower and each Lender shall be only to determine that the documents (including each demand for payment) delivered under each Facility LC in connection with such presentment shall be in conformity in all material respects with such Facility LC.  Each LC Issuer shall endeavor to exercise the same care in the issuance and administration of the Facility LCs issued by it as it does with respect to letters of credit in which no participations are granted, it being understood that in the absence of any gross negligence or willful misconduct by an LC Issuer, each Lender shall be unconditionally and irrevocably liable without regard to the occurrence of any Default or any condition precedent whatsoever, to reimburse such LC Issuer on demand for (i) such Lender’s Pro Rata Share of the amount of each payment made by such LC Issuer under each Facility LC to the extent such amount is not reimbursed by the Borrower pursuant to Section 2.19.7 below, plus (ii) interest on the foregoing amount to be reimbursed by such Lender, for each day from the date of such LC Issuer’s demand for such reimbursement (or, if such demand is made after 11:00 a.m. (Central time) on such date, from the next succeeding Business Day) to the date on which such Lender pays the amount to be reimbursed by it, at a rate of interest per annum equal to the Federal Funds Effective Rate for the first three days and, thereafter, at the Alternate Base Rate.

 

2.19.7      Reimbursement by Borrower .  The Borrower shall be irrevocably and unconditionally obligated to reimburse each LC Issuer on or before the applicable LC Payment Date for any amounts to be paid by such LC Issuer upon any drawing under any

 

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Facility LC, without presentment, demand, protest or other formalities of any kind; provided that neither the Borrower nor any Lender shall hereby be precluded from asserting any claim for direct (but not consequential) damages suffered by the Borrower or such Lender to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of such LC Issuer in determining whether a request presented under any Facility LC issued by it complied with the terms of such Facility LC or (ii) such LC Issuer’s failure to pay under any Facility LC issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC.  All such amounts paid by an LC Issuer and remaining unpaid by the Borrower shall bear interest, payable on demand, for each day until paid at a rate per annum equal to (x) the Alternate Base Rate for such day if such day falls on or before the applicable LC Payment Date and (y) the sum of 2% plus the Alternate Base Rate for such day if such day falls after such LC Payment Date.  Each LC Issuer will pay to each Lender ratably in accordance with its Pro Rata Share all amounts received by it from the Borrower for application in payment, in whole or in part, of the Reimbursement Obligation in respect of any Facility LC issued by such LC Issuer, but only to the extent such Lender has made payment to such LC Issuer in respect of such Facility LC pursuant to Section 2.19.6.  Subject to the terms and conditions of this Agreement (including without limitation the submission of a Borrowing Notice in compliance with Section 2.8 and the satisfaction of the applicable conditions precedent set forth in Article IV), the Borrower may request an Advance hereunder for the purpose of satisfying any Reimbursement Obligation.

 

2.19.8      Obligations Absolute .  The Borrower’s obligations under this Section 2.19 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have or have had against any LC Issuer, any Lender or any beneficiary of a Facility LC.  The Borrower further agrees with each LC Issuer and each Lender that the LC Issuers and the Lenders shall not be responsible for, and the Borrower’s Reimbursement Obligation in respect of any Facility LC shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or any dispute between or among the Borrower, any of its Affiliates, the beneficiary of any Facility LC or any financing institution or other party to whom any Facility LC may be transferred or any claims or defenses whatsoever of the Borrower or of any of its Affiliates against the beneficiary of any Facility LC or any such transferee.  No LC Issuer shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Facility LC.  The Borrower agrees that any action taken or omitted by any LC Issuer or Lender under or in connection with each Facility LC and the related drafts and documents, if done without gross negligence or willful misconduct, shall be binding upon the Borrower and shall not put any LC Issuer or Lender under any liability to the Borrower.  Nothing in this Section 2.19.8 is intended to limit the right of the Borrower to make a claim against an LC Issuer for damages as contemplated by the proviso to the first sentence of Section 2.19.7.

 

2.19.9      Actions of LC Issuer .  Each LC Issuer shall be entitled to rely, and shall be fully protected in relying, upon any Facility LC, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype

 

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message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by such LC Issuer.  Each LC Issuer shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first have received such advice or concurrence of the Required Lenders as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  Notwithstanding any other provision of this Section 2.19, each LC Issuer shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and any future holders of a participation in any Facility LC.

 

2.19.10        Indemnification .  The Borrower hereby agrees to indemnify and hold harmless each Lender, each LC Issuer and the Agent, and their respective directors, officers, agents and employees from and against any and all claims and damages, losses, liabilities, costs or expenses which such Lender, such LC Issuer or the Agent may incur (or which may be claimed against such Lender, such LC Issuer or the Agent by any Person whatsoever) by reason of or in connection with the issuance, execution and delivery or transfer of or payment or failure to pay under any Facility LC or any actual or proposed use of any Facility LC, including, without limitation, any claims, damages, losses, liabilities, costs or expenses which such LC Issuer may incur by reason of or in connection with (i) the failure of any other Lender to fulfill or comply with its obligations to such LC Issuer hereunder (but nothing herein contained shall affect any rights the Borrower may have against any defaulting Lender) or (ii) by reason of or on account of such LC Issuer issuing any Facility LC which specifies that the term “Beneficiary” included therein includes any successor by operation of law of the named Beneficiary, but which Facility LC does not require that any drawing by any such successor Beneficiary be accompanied by a copy of a legal document, satisfactory to such LC Issuer, evidencing the appointment of such successor Beneficiary; provided that the Borrower shall not be required to indemnify any Lender, LC Issuer or the Agent for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (x) the willful misconduct or gross negligence of such LC Issuer in determining whether a request presented under any Facility LC complied with the terms of such Facility LC or (y) such LC Issuer’s failure to pay under any Facility LC after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC.  Nothing in this Section 2.19.10 is intended to limit the obligations of the Borrower under any other provision of this Agreement.

 

2.19.11    Lenders’ Indemnification .  Each Lender shall, ratably in accordance with its Pro Rata Share, indemnify each LC Issuer, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrower but without limiting any obligation of the Borrower to do so) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees’ gross negligence or willful misconduct or such LC Issuer’s failure to pay under any Facility LC after the presentation

 

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to it of a request strictly complying with the terms and conditions of the Facility LC) that such indemnitees may suffer or incur in connection with this Section 2.19 or any action taken or omitted by such indemnitees hereunder.

 

2.19.12    Cash Collateralization .  If any Default shall have occurred and be continuing, on the Business Day that the Borrower receives written notice from the Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account (the “Facility LC Collateral Account”) with the Agent, in the name of the Agent and for the ratable benefit of the Lenders and the benefit of the LC Issuers (as applicable), an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of a Default with respect to the Borrower described in Section 7.6 or 7.7.  Such deposit shall be held by the Agent as collateral for the payment and performance of the Obligations.  The Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over the Facility LC Collateral Account.  The Agent will invest any funds on deposit from time to time in the Facility LC Collateral Account in certificates of deposit of JPMorgan Chase Bank having a maturity not exceeding 30 days.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in the Facility LC Collateral Account shall be applied by the Agent to reimburse each LC Issuer for Reimbursement Obligations for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other obligations of the Borrower under this Agreement.  If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of a Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Defaults have been cured or waived.

 

2.19.13    Rights as a Lender .  In its capacity as a Lender, each LC Issuer shall have the same rights and obligations as any other Lender.

 

2.20         Extension of Facility Termination Date .  (a)  Not more than once in any fiscal year of the Borrower, the Borrower may request an extension of the Facility Termination Date to a date not later than the fifth (5 th ) anniversary of the date of such request by submitting a request for an extension (the “Extension Request”) to the Agent not less than 180 days prior to the then scheduled Facility Termination Date.  Promptly upon (but not later than five Business Days after) the Agent’s receipt and approval of the Extension Request, the Agent shall deliver to each Lender a copy of, and shall request each Lender to approve, the Extension Request.  Each Lender approving the Extension Request shall deliver its written approval no later than 60 days after such Lender’s receipt of the Extension Request.  If the written approval of the Extension Request by Lenders whose Pro Rata Shares equal or exceed 66-2/3% in the aggregate is received by the Agent within such 60-day period and provided that, on the last day of such 60-day period, no Default exists and the representations and warranties contained in Article V and in the Guaranty are true and correct except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and

 

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correct on and as of such earlier date, then the Facility Termination Date shall be extended as specified in the Extension Request but only with respect to the Lenders that have given their written approval.  Except to the extent that a Lender that did not give its written approval to such Extension Request (“Rejecting Lender”) is replaced as provided in Section 2.21, the Loans and all interest thereon, fees and other Obligations owed to such Rejecting Lender shall be paid in full on the Facility Termination Date as determined prior to such Extension Request (the “Rejecting Lender’s Facility Termination Date”), and Borrower shall make such additional payments (if any) of the Loan as are necessary to cause the Aggregate Credit Exposure not to exceed the Aggregate Commitment (as reduced) on any Rejecting Lender’s Termination Date.

 

(a)           If Lenders whose Pro Rata Shares equal or exceed 66-2/3% in the aggregate approve the Extension Request, the Borrower, upon notice to the Agent and any Rejecting Lender, may, subject to the provisions of the last sentence of Section 2.20(c), terminate the Commitment of such Rejecting Lender (or such portion of such Commitment that is not assigned to a Replacement Lender in accordance with Section 2.21), which termination shall occur as of a date set forth in such Borrower’s notice but in no event more than thirty (30) days following such notice.  The termination of a Lender’s Commitment shall be effected in accordance with Section 2.20(c).

 

(b)           If the Borrower elects to terminate a Commitment of a Rejecting Lender as provided in Section 2.20(b), the Borrower shall pay to the Rejecting Lender all Obligations due and owing to it hereunder or under any other Loan Document, including, without limitation, the aggregate outstanding principal amount of the Loans owed to such Rejecting Lender, together with accrued interest thereon through the date of such termination, amounts payable under Sections 3.1 and 3.2 and the Reimbursement Obligations, Commitment Fees and LC Fees payable to such Rejecting Lender.  Upon request by the Borrower or the Agent, the Rejecting Lender will deliver to the Borrower and the Agent a letter setting forth the amounts payable to such Rejecting Lender as set forth above.  Upon the termination of such Rejecting Lender’s Commitment and payment of the amounts provided for in the immediately preceding sentence, the Borrower shall have no further obligations to such Rejecting Lender under this Agreement and such Rejecting Lender shall cease to be a Lender, provided , however , that such Rejecting Lender shall continue to be entitled to the benefits of Sections 2.19.10, 2.19.11, 2.19.12, 3.1, 3.2, 3.4, 3.5, 6.8(c), 9.6, 9.10 and this Section 2.20(c), as well as to any fees accrued for its account hereunder not yet paid, and shall continue to be obligated under Section 10.8 with respect to obligations and liabilities accruing prior to the termination of such Rejecting Lender’s Commitment.  If, as a result of the termination of the Rejecting Lender’s Commitment, any payment of a Eurodollar Loan occurs on a day which is not the last day of the applicable Interest Period, the Borrower shall pay to the Agent for the benefit of the Lenders (including any Rejecting Lender) any loss or cost incurred by the Lenders (including any Rejecting Lender) resulting therefrom in accordance with Section 3.4.  Upon the effective date of the termination of the Rejecting Lender’s Commitment, the Aggregate Commitment shall be reduced by the amount of the terminated Commitment of the Rejecting Lender, and each other Lender shall be deemed to have irrevocably and unconditionally purchased and received (subject to the provisions of the last sentence of this Section 2.20(c)), without recourse or warranty, from the Rejecting Lender, an undivided interest and participation in any Facility LC then outstanding, ratably, such that each Lender (excluding the Rejecting Lender but including any Replacement Lender that acquires an interest hereunder from such Rejecting Lender) holds a participation

 

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interest in each Facility LC in proportion to the ratio that such Rejecting Lender’s Commitment (upon the effective date of such termination of the Rejecting Lender’s Commitment) bears to the Aggregate Commitment (as reduced by the termination of such Rejecting Lender’s Commitment or a part thereof).  Notwithstanding the foregoing, if, upon the termination of the Commitment of such Rejecting Lender, the Aggregate Credit Exposure would exceed the Aggregate Commitment (as reduced), the Borrower may not terminate such Rejecting Lender’s Commitment unless the Borrower, on or prior to the effective date of such termination, prepays, in accordance with the provisions of this Agreement, outstanding Advances or Swing Line Loans or causes to be canceled, released and returned to the applicable LC Issuer outstanding Facility LCs or deposits cash into the Facility LC Collateral Account in sufficient amounts in the aggregate such that, on the effective date of such termination, the Aggregate Credit Exposure, less the amounts held in the Facility LC Collateral Account, does not exceed the Aggregate Commitment (as reduced).  In the event that the Borrower makes such deposit into the Facility LC Collateral Account, such deposits shall be applied by the Agent to pay to the applicable LC Issuer amounts drawn on any Facility LC that are not reimbursed by the Borrower and, provided no Default has occurred that is continuing, shall be returned to the Borrower when the Aggregate Credit Exposure equals or is less than the Aggregate Commitment.

 

2.21         Replacement of Lender .  (a)  If the Borrower is required pursuant to Section 3.1, 3.2 or 3.5 to make any additional payment to any Lender or if any Lender’s obligation to make or continue, or to convert ABR Loans into, Eurodollar Loans shall be suspended pursuant to Section 3.3 or a Lender is a Rejecting Lender (any Lender so affected, an “Affected Lender”), the Borrower may elect, if such amounts continue to be charged or such suspension is still effective or if such Affected Lender is a Rejecting Lender, to replace such Affected Lender as a Lender party to this Agreement, provided that no Default or Unmatured Default shall have occurred and be continuing at the time of such replacement, and provided further that, concurrently with such replacement, (i) another bank or other entity which is reasonably satisfactory to the Borrower and the Agent shall agree, as of such date, to purchase for cash the Loans and other Obligations due to the Affected Lender pursuant to an Assignment and Assumption and to become a Lender for all purposes under this Agreement and to assume all obligations of the Affected Lender to be terminated as of such date and to comply with the requirements of Section 12.1 applicable to assignments (such bank or other entity, a “Replacement Lender”), and (ii) the Borrower shall pay to such Affected Lender in same day funds on the day of such replacement (A) all interest, fees and other amounts then accrued but unpaid to such Affected Lender by the Borrower hereunder to and including the date of termination, including without limitation payments due to such Affected Lender under Sections 3.1, 3.2 and 3.5, and (B) an amount, if any, equal to the payment which would have been due to such Lender on the day of such replacement under Section 3.4 had the Loans of such Affected Lender been prepaid on such date rather than sold to the Replacement Lender.  Upon replacement of such Affected Lender and payment of the amounts provided for in the immediately preceding sentence, the Borrower shall have no further obligations to such Affected Lender under this Agreement and such Affected Lender shall cease to be a Lender, provided, however , such Affected Lender shall continue to be entitled to the benefits of Sections 2.19.10, 2.19.11, 2.19.12, 3.1, 3.2, 3.4, 3.5, 6.8(c), 9.6 and 9.10, as well as to any fees accrued for its account hereunder and not yet paid, and shall continue to be obligated under Section 10.8 with respect to obligations and liabilities accruing prior to such Affected Lender’s replacement.

 

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(b)           In the event that the Affected Lender is a Rejecting Lender, the Borrower may elect to have a part of the Rejecting Lender’s rights and obligations under this Agreement and the other Loan Documents assigned pursuant to this Section 2.21, provided that the Borrower also elects, pursuant to Section 2.20(b) to terminate the entire amount of such Rejecting Lender’s Commitment not so assigned, which termination shall be effective on the date on which such assignment of the Rejecting Lender’s rights and obligations is consummated under this Section 2.21.

 

2.22         Swing Line .  (a)  The Swing Line Lender agrees, on the terms and conditions hereinafter set forth, to make loans (“Swing Line Loans”) to the Borrower from time to time during the period from the date of this Agreement, up to but not including the Facility Termination Date, in an aggregate principal amount not to exceed at any time outstanding the lesser of (i) the Swing Line Commitment or (ii) the amount by which the Aggregate Commitment exceeds the Aggregate Credit Exposure.  The Swing Line Loan shall be evidenced by a note in the form of Exhibit F hereto (the “Swing Line Note”).  Swing Line Loans shall bear interest at the Alternate Base Rate, which interest shall be payable monthly on each Payment Date.

 

(b)           Each Swing Line Loan which shall not utilize the Swing Line Commitment in full shall be in an amount not less than One Million Dollars ($1,000,000) and, if in excess thereof, in integral multiples of One Hundred Thousand Dollars ($100,000).  Within the limits of the Swing Line Commitment, the Borrower may borrow, repay and reborrow under this Section 2.22.

 

(c)           The Borrower shall give the Swing Line Lender notice of any request for a Swing Line Loan not later than 3:00 p.m. (Central time) on the Business Day of such Swing Line Loan, specifying the amount of such requested Swing Line Loan.  All notices given by the Borrower under this Section 2.22(c) shall be irrevocable.  Upon fulfillment of the applicable conditions set forth in Article IV, the Swing Line Lender will make the Swing Line Loan available to the Borrower in immediately available funds by crediting the amount thereof to the Borrower’s account with the Swing Line Lender, provided , however , that the Swing Line Lender shall not make a Swing Line Loan hereunder if it has received written notice from the Agent, the Borrower or the Required Lenders, prior to the requested date of such Swing Line Loan, that one or more applicable conditions contained in Section 4.2 shall not be satisfied.

 

(d)           Each Swing Line Loan shall be paid in full on or before the fifth (5 th ) Business Day following the making of such Swing Line Loan.  Payment of a Swing Line Loan may be effected by an Advance pursuant to Section 2.8.  If such Swing Line Loan is not paid in full by the fifth (5 th ) Business Day following the making of such Swing Line Loan, it shall be paid from the proceeds of an Advance made by the close of the next Business Day pursuant to Section 2.8, which Advance shall be made by the Lenders upon request by the Agent without regard to whether a Borrowing Notice is delivered or the conditions to such Advance under Section 4.2 are satisfied (provided the conditions to the making of such Swing Line Loan were satisfied).  If for any reason such Advance cannot be made, the Lenders shall, upon notice from the Agent, purchase (without recourse or warranty) participations equal to their Pro Rata Shares of such Swing Line Loan.

 

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ARTICLE III

 

YIELD PROTECTION; TAXES

 

3.1           Yield Protection .  If any Change in Law:

 

(i)                                      subjects any Lender or LC Issuer or any applicable Lending Installation to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender or LC Issuer in respect of its Eurodollar Loans, Facility LCs or participations therein, or

 

(ii)                                   imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or LC Issuer or any applicable Lending Installation (other than reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Advances or ABR Advances, as applicable), or

 

(iii)                                imposes on such Lender or LC Issuer or any applicable Lending Installation any other condition,

 

and the result of any of the foregoing is to increase the cost to such Lender or LC Issuer or applicable Lending Installation, as the case may be, of making or maintaining its Eurodollar Loans or Commitment or of issuing or participating in Facility LCs or to reduce the return received or receivable by such Lender or LC Issuer or applicable Lending Installation, as the case may be, in connection with such Eurodollar Loans, or Commitment, or Facility LCs or participations therein, then, within 15 days of demand by such Lender or LC Issuer, as the case may be, the Borrower shall pay such Lender or LC Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or LC Issuer, as the case may be, for such increased cost or reduction in amount received.

 

3.2           Changes in Capital Adequacy Regulations .  If any Lender or LC Issuer determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or LC Issuer’s capital or on the capital of such Lender’s or LC Issuer’s holding company, if any, as a consequence of this Agreement or the Loans made or maintained by, or participations in Facility LCs held by, such Lender, or the Facility LCs issued by such LC Issuer, to a level below that which such Lender or LC Issuer or such Lender’s or LC Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or LC Issuer’s policies and the policies of such Lender’s or LC Issuer’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or LC Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or LC Issuer or such Lender’s or LC Issuer’s holding company for any such reduction suffered.  The Borrower shall not be required to compensate any Lender pursuant to this paragraph for any amounts incurred more than 90 days prior to the date such Lender notifies the Borrower in writing of such Lender’s intention to claim compensation therefor; provided , however , that if the circumstances giving rise to such claim have a retroactive effect, then such 90-day period shall be extended to include the period of such retroactive effect.

 

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3.3            Availability of Types of Advances .  If any Lender determines that maintenance of its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required Lenders determine that (i) deposits of a type and maturity appropriate to match fund Eurodollar Advances are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately reflect the cost of making or maintaining Eurodollar Advances, then the Agent shall suspend the availability of Eurodollar Advances until the Lender notifies the Agent and the Borrower that the circumstances giving rise to such determination no longer exist, and require any affected Eurodollar Advances to be repaid or converted to ABR Advances, subject to the payment of any funding indemnification amounts required by Section 3.4, either on the last day of the Interest Period thereof, if such Lender may lawfully continue to maintain such Eurodollar Loans, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans.

 

3.4            Funding Indemnification .  In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of a Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of an election by the Borrower pursuant to Section 2.20, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event.  Such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market.

 

3.5            Taxes .  (i)  All payments by the Borrower to or for the account of any Lender, LC Issuer or the Agent hereunder or under any Note or Facility LC Application shall be made free and clear of and without deduction for any and all Taxes.  If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender, LC Issuer or the Agent, (a) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.5) such Lender, LC Issuer or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b) the Borrower shall make such deductions, (c) the Borrower shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) the Borrower shall furnish to the Agent the original copy of a receipt evidencing payment thereof within 30 days after such payment is made.

 

(i)             In addition, the Borrower hereby agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies w